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Common Fees on Deposit Accounts, How to Avoid Them

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Bank accounts may come with fees. You should be aware of these common fees and how you can avoid them.

The most common deposit accounts include checking, savings, money market and certificate of deposit (CD) accounts — each have fees that are frequently associated with them.

Most deposit accounts, except CDs, carry monthly maintenance fees — some can be avoided, some cannot. Depending on the bank, these monthly fees may be waived under certain requirements — often entailing a minimum account balance or a monthly direct deposit. Before signing up for any of these deposit accounts, review whether your financial habits will help to meet the criteria and avoid the fees.

Read: Do you have too many bank accounts?

Other fees that often hit checking and money market account customers include those for overdrafts and out-of-network ATM access. Laws require that you opt in for overdraft — to have the bank cover a transaction that results in a negative balance — or the transaction is denied, in which case the overdraft fee won’t apply. To avoid out-of-network ATM fees, you can try visiting a nearby grocery store that offers cash back when you make a purchase.

Savings and money market accounts are usually low-activity accounts with the primary focus on building savings, which is why there is often a penalty when you make too many withdrawals or outbound transactions. Federal law sets a limit of six withdrawals or outbound transfers per month — banks may charge a fee for transactions in excess of this limit. Repeated violations of this rule may result in your account being closed or converted to a checking account. You may consider an interest checking account if you seek a transaction account that earns interest on deposits.

The most common fee — and often the only fee — that might apply to a CD is the early withdrawal fee. Since CDs award higher rates to keep money locked in, you are penalized for taking money out. Most CDs impose a fee that is equivalent to several months of interest — longer CD terms mean bigger early withdrawal fees. Consider no-penalty CDs or a CD ladder to offer more access to money if you need it.

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